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07 February 2004

Dynasty, not conspiracy

Atrios points out that Paul Krugman has a terrific article in the New York Review of Books about Kevin Phillips' American Dynasty: Aristocracy, Fortune, and the Politics of Deceit in the House of Bush and Ron Suskind's The Price of Loyalty: George W. Bush, the White House, and the Education of Paul O'Neill.

2002 was the year of corporate scandals; for a brief period the revelations of chicanery at Enron, WorldCom, and other pillars of the economy seemed likely to dominate the midterm election. Instead, the administration -- after making a few gestures toward corporate reform and grudgingly agreeing to a small increase in the SEC's budget -- beat the drums of war, and drowned the issue out.

Still, officials remained concerned about a sluggish economy. But what was the cause of that sluggishness? The President, according to his secretary of the Treasury, had a simple answer: ''SEC overreach.'' That is, those nasty regulators, in their attempt to crack down on corporate malfeasance, were making executives and investors nervous, depressing the economy. Here's how Suskind describes the moment:

O'Neill couldn't quite believe what he was hearing -- SEC overreach? No wonder the White House had backed off from the toughest medicine for crooked executives and eventually ceded the corporate governance debate to Congress. How, though, could the President believe that the largely overwhelmed SEC had any significant effect on the vast US economy?

Kevin Phillips could, of course, have told him: Bush -- whose own business career had involved some remarkably Enron-like moments -- was revealing his instinctive, indeed inbred sympathy for corporate insiders, and his antipathy toward anyone who might try to enforce accountability.